How can an inventory management system help eliminate dead stock?

Posted in Business on June 02 2021 at 02:39 PM

Not using an inventory management system in business causes many problems for the company. Inventory is the key to success in any business. This is a difficult task in which there is no room for error. Managing large stocks is a complex process. Any mistake can increase the risk of damage and dead stock. To avoid these situations an efficient inventory system is essential. You must be thinking about how an inventory management system can reduce or eliminate dead stock?
Before we answer this question, let’s focus on the basics. What is deadstock? First, we are going to give a brief introduction to dead stock.

What is deadstock?

Deadstock is a product that neither sells nor makes a profit. Such items are either lying in the warehouse or send back by the retailers. It affects the business by reducing the cash flow. This cash can be used to expand the business. As a result, these items occupy the place and restricted the number of new products. 

Causes of dead stock

Many reasons may result in deadstock.

End of Season

This factor can be considered a major reason. In many cases, exceeding the limit leads to dead stock. You can't offer leather jackets to consumers in the summer. You have to wait for winter to sell your winter stock. In other words, until then all your stock will be lying on the shelves. There is no guarantee that you will sell these items in season, as trends and styles change frequently. These situations are mostly consequences of wrong and inaccurate forecasting.

Product life cycle

Every product has a life cycle. There are many steps involved. Development to decline, a product completes its life cycle accordingly. Product life cycle shortages can create dead stock scenarios. It is common for one item to rule the industry before any other item replaced them. Advanced and new versions also affect item demand.

Change in market trends

In this rapidly changing world, how can you expect market trends to remain unchangeable? you might end up storing a today and fail to sell it tomorrow due to a sudden trend change. When you calculate the wrong demand for a product, you invite the deadstock yourself. Without an inventory management system, you can never run your stock efficiently.

Damaged Products
Broken and damaged items in your warehouse can be a major cause of deadstock. If you fail to check the quality of things frequently you will suffer a loss. In this case, either the customer will return the goods to you or the item will be left in the warehouse for good. 

How to eliminate dead stock?

There are many techniques and ways a company can use to eliminate deadstock. There are several actions you can take and get rid of the deadstock situation. We can categorize these methods into two categories;

  • Basic methods
  • Advanced methods

Basic Methods

These are also known as short-term techniques. Let’s check the short-term techniques before exploring the long-term methods.

Special Discounts

Offer discounts to your customers. You can offer this discount on the first purchase. Many businesses offer a special discount to a referral by providing them a code to use as their reference number. Due to the less demand, you have to reduce the price of the product anyway. The best option to attract customers is this special offer.

Return the products to the supplier    

In case you failed to sell your products and you received them not long ago then you can return them. In many cases, suppliers facilitate businesses by giving them credits for future purchases. You can exchange these items to get new stock.

Bundle Offer

Pairing a dead product with an active item can help you in many ways. Bundling is quite a nice way to attract your customers. In many cases, they get their lost connection with that product. Such as you pair up a brooch with a top it somehow reminds them of the glorious past of brooches. This is one of the quickest ways to empty your shelves.   

Advanced Methods

These are also known as long-term techniques as they help to eliminate the possibilities of deadstock.

Inventory management system

The inventory management system tracks your stock. It helps you to understand your inventory level. By knowing the amount of inventory, you can avoid overstocking. You can find out which inventory is already sold and which product is still in the warehouse. A complete report of inventory assists you to maintain your inventory. With an efficient inventory management system, a deadstock or overstock scenario is out of the question. This system identifies the root cause of deadstock inventory. By eliminating those reasons, you can put an end to deadstock.

Accurate Forecasting

Poor purchasing decisions usually result in business loss. To make the right decisions at right time you must know the market trends. Accurate forecasting is essential to get profit. It is very difficult to manage and forecast without any system. You need an advanced system to get a detailed purchase and sales report.  This report is your tool to get an accurate estimate of your inventory future. 

Reordering Level

The reordering level is a set limit of products in the system. It is the minimum number of products in the inventory. When inventory reaches that point system will notify the user to purchase new items to fill in. This helps to avoid overstocking and overselling. You do not need to buy any products unless it reaches a minimum level. This way dead stock is impossible to happen.


FIFO (First-in First-Out) and LIFO (Last-in First-Out) are essential to managing the inventory. You need to check which products enter the warehouse at what time and after how many days they left the place. Many products come last but due to their characteristics, you need to sell them first. Keeping a record of these things is necessary. The inventory management system helps you to check these records in real-time.  


Final Call

As a businessman, you have to face many issues. Achieving a prominent place in the market is not an easy task. By eliminating a few hurdles such as dead stock inventory you can grow your business effortlessly. All you need is an inventory management system to abolish this problem. Thinking of the ways to get rid of the dead stock is not enough. You have to make some quick decisions to save your business from such burdens. Explore the market and get the best-suited inventory management software to sleep in the night without having dead stock nightmares.

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